Floyd County Board of Education, Rome, Georgia, annual financial report for the fiscal year ended June 30, 2009 (including independent auditor's reports)

FLOYD COUNTY BOARD OF EDUCATION
ROME, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2009
(Including Independent Auditor's Reports)

FLOYD COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

9

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

10

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

27

FLOYD COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

28

3 SCHEDULE OF STATE REVENUE

30

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

32

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

33

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133

SECTION Ill AUDITEE1S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 18, 2010

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Floyd County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Floyd County Board of Education, as of and for the year ended June 30, 2009, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Floyd County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Floyd County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Floyd County Board of Education, as of June 30, 2009, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

2009ARL-11

In accordance with Government Auditing Standards, we have also issued our report dated June 18, 2010, on our consideration of the Floyd County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through x and page 27 respectively, are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Floyd County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits of States/ Local Governments/ and Non-Profit Organizations/ are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
?~tJ.~~
Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2009ARL-11

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2009

INTRODUCTION
The School District's financial statements for the fiscal year ended June 30, 2009, includes a series of basic financial statements that report financial Information for the School District as a whole, its funds, and its fiduciary responsibilities. The Statement of Net Assets and the Statement of Activities provide financial information about all of the School District's activities and present both a short-term and long-term view of the School District's f inances on a global basis. The fund financial statements provide information about all of the School District's funds. Information about these funds, such as the School District's General Fund, is important in its own right, but will also give insight into the School District's overall soundness as reported in the Statement of Net Assets and the Statement of Activities.
FINANCIAL HIGHLIGHTS
Key financial highlights for fiscal year 2009 are as follows:
On the District-wide financial statements:
District-wide net assets at June 30, 2009, were $111,743,108. Net assets reflect the difference between all assets of the School District (including capital assets, net of depreciation) and all liabilities, both short-term and long-term. The net assets at June 30, 2009, of $111,743,108 represented an increase of $7,166,100 in net assets when compared to the prior year.
The School District had $113.09 million in expenses relating to governmental activities; only $68.02 million of these expenses were offset by program specific charges for services, grants and contributions. However, general revenues (primarily property and sales taxes) of $52.2 million were adequate to provide for these programs.
As stated above, general revenues accounted for $52.2 million or about 43% of all revenues totaling $120.3 million. Program specific revenues in the form of charges for services, grants, and contributions accounted for the balance of these revenues.

Source of Revenues

General Revenue Property Taxes
26.4%

General Revenue Sales Taxes 8.6%
General Revenue All Other 8.4%

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2009
The School District increased its outstanding bond debt by $17.1 million to $34.65 million through the issuance of general obligation bond principal in May, 2009. The existing bond debt of $34.65 million will be retired by a Special Purpose Local Option Sales Tax and interest earned thereon that was approved by the citizenry in conjunction with the Bond Sale.
On the fund financial statements:
Among major funds, the General Fund had almost $107.4 million in revenues and almost $108.4 million in expenditures. The General Fund balance of $7.3 million at June 30, 2009, decreased $1.79 million from the prior year fund balance. The decrease in the fund balance was unplanned due to a decrease in mid-year state funding, and significant unspent budget or unanticipated revenues did not offset the state funding decrease.
OVERVIEW OF THE FINANCIAL STATEMENTS
These financial statements consists of three parts; management's discussion and analysis (this section), the basic financial statements including notes to the financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the District-wide and fund financial statements.
The District-wide financial statements include the 'Statement of Net Assets' and 'Statement of Activities'. These statements provide information about the activities of the School District presenting both short-term and long-term information about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The 'Governmental Funds' statements disclose how basic services are financed in the short-term as well as what remains for future spending. The 'Fiduciary Funds' statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others. In the case of the Floyd County School District, the General Fund, Capital Projects Funds, and Debt Service Funds are all considered to be major funds. The School District has no nonmajor funds as defined by GASB Statement 34 for the purposes of this report.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.
District-wide Statements
Since Floyd County School District has no operations that have been classified as "Business Activities", the District-wide financial statements are basically a consolidation of all of the School District's operating funds into one column called governmental activities. In reviewing the Districtwide financial statements, a reader might ask the question, are we in a better financial position now than last year? The 'Statement of Net Assets' and the 'Statement of Activities' provides the basis for answering this question. These financial statements include all School District's assets and liabilities and uses the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
ii

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2009
These two statements report the School District's net assets and any changes in those assets. The change in net assets is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the results of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs, student-teacher ratios, and other factors.
When analyzing District-wide financial statements, it is important to remember these statements are prepared using an economic resources measurement focus (accrual accounting) and involve the following steps to format the Statement of Net Assets:
Capitalize current outlays for capital assets Depreciate capital assets Report long-term debt as a liability Calculate revenue and expense using the economic resources measurement focus and the
accrual basis of accounting Allocate net assets as follows:
o Net Assets invested in capital assets, net ofrelated debt o Restricted net assets are those with constraints placed on the use by external
sources such as creditors, grantors, contributors or laws and regulations. o Unrestricted net assets are net assets that do not meet any of the above
restrictions.
Fund Financial Statements
The School District uses many funds or sub-funds to account for a multitude of financial transactions during the fiscal year. The fund financial statements presented in this report provide detail information about the School District's significant or major funds. As discussed previously, the School District has no non major funds as defined by generally accepted accounting principles.
The School District has two kinds of funds as discussed below:
Governmental Funds - Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using the modified accrual method of accounting which measures cash and all other financial assets that can be readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The differences between government activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds are reconciled in the financial statements.
Fiduciary Funds The School District is the trustee, or fiduciary, for assets that belong to clubs, organizations and others within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.
iii

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2009
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE Net assets, which is the difference between total assets and total liabilities, is one indicator of the financial condition of the School District. When revenues exceed expenses, the result is an increase in net assets. When expenses exceed revenues, the result is a decrease in net assets. The relationship between revenues and expenses can be thought of as the School District's operating results. The School District's net assets, as measured in the Statement of Net Assets, can be one way to measure the School District's financial health, or financial position. Over time, increases or decreases in the School District's net assets as measured in the Statement of Activities - are one indicator of whether its financial health is improving or deteriorating. However, the School District's goal and mission is to provide success for each child's education, not to generate profits as private corporations do. For this reason, many other nonfinancial factors should be considered in assessing the overall health of the School District. In the case of the Floyd County School District, assets exceeded liabilities by $111.7 million at June 30, 2009. To better understand the School District's actual financial position and ability to deliver services in future periods, it is necessary to review the various components of the net asset category. For example, of the $111.7 million of net assets, almost $13.9 million was restricted for continuation of Federal programs, debt service, and capital projects. Accordingly, these funds were not available to meet the School District's ongoing obligations to citizens and creditors. In addition, the School District also had $98.1 million (net of related debt) invested in capital assets (e.g., land, buildings, and equipment). The School District uses these capital assets to provide educational services to students within geographic boundaries served by the School District. Because of the very nature and on-going use of the assets being reported in this component of net assets, it must be recognized that this portion of the net assets is notavailable for future spending.
The deficit amount of unrestricted net assets of almost $290 thousand reflects reductions in state
revenues and the value of the severance pay liability. The School District has resolved to terminate the severance pay policy as of December 31, 2011. The elimination of this liability should return unrestricted net assets to an amount that will allow to School District to meet the ongoing needs of its citizens and creditors.
iv

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2009

Table 1 provides a summary of the School District's net assets for this fiscal year as compared to the prior fiscal year.
Table 1 Net Assets

Assets Current and Other Assets Capital Assets, Net

Governmental Activities

FY2009

FY2008

$

61,117,266 $

37,647,631

115,506,129

113,603,556

Tota I Assets

$ 176,623,395 $ 151,251,187

Liabilities Current and Other Liabilities Long-Term Liabilities

$

15,511,290 $

14,955,819

49,368,997

31,718,361

Total Liabilities

$

64,880,287 $

46,674,180

Net Assets Invested in Capital Assets, Net of Debt Restricted Unrestricted

$

98,114,086 $

89,156,250

13,918,997

13,937,251

-289,975

1,483,506

Total Net Assets

$ 111,743,108 $ 104,577,007

V

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2009

Table 2 shows the Changes in Net Assets for this fiscal year as compared to the prior fiscal year.

Table 2

Change in Net Assets

Governmental Activities

FY 2009

FY 2008

Revenues

Program Revenues:

Charges for Services and Sales

$

2,923,520 $

2,976,370

Operating Grants and Contributions

62,249,846

64,901,023

Capital Grants and Contributions

2,850,541

2,553,633

Total Program Revenues

$ 68,023,907 $ 70,431,026

General Revenues:

Property Taxes

For Maintenance and Operations

$

Other Taxes - Railroad Equipment

Sales Taxes

Special Purpose Local Option Sales Tax

For Debt Service

For Capital Projects

Intangible Recording Tax

Real Estate

Grants and Contributions not Restricted to Specific Programs

Investment Earnings

Miscellaneous

Special Item

Gain or Loss on Disposal of Assets

Total General Revenues

$

31,678,700 $ 36,359
8,264,020 1,611,090
385,907 65,655
7,148,941 373,647
2,582,690
82,228 52,229,237 $

31,012,856 35,550
7,042,621 3,706,810
483,994 129,350 5,203,232 1,043,552 2,718,008
-93,677 51,282,296

Total Revenues

$ 120,253,144 $ 121,713,322

Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt

$ 72,740,428 $ 71,163,357

3,230,253 1,877,418 2,225,645 2,031,694 8,586,561
652,486 8,596,083 5,260,074
839,863 605,279

3,314,188 2,121,889 2,334,167 2,470,666 8,701,737
682,325 9,861,626 5,018,765
713,062 550,112

15,302 289,490 5,702,234 434,233

21,773 5,820,943
846,147

Total Expenses

$ 113,087,043 $ 113,620,757

Increase in Net Assets

$

7,166,101 $

8,092,565

vi

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2009

Cost of Providing Services

The Statement of Activities shows the cost of program services and the charges for services and grants offsetting these services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. Net cost of services can be defined as the total cost less fees generated by the activities and intergovernmental revenue provided for specific programs. The net cost reflects the financial burden on the School District's taxpayers by each activity as compared to the prior fiscal year.
Table 3
Cost of Services

Total Cost of Services

FY2009

FY 2008

Net Cost of Services

FY2009

FY2008

Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Community Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt

$ 72,740,428 $ 71,163,357 $ 24,404,611 $ 21,340,128

3,230,253 1,877,418 2,225,645 2,031,694 8,586,561
652,486 8,596,083 5,260,074
839,863 605,279

3,314,188 2,121,889 2,334,167 2,470,666 8,701,737
682,325 9,861,626 5,018,765
713,062 550,112

1,918,088 1,113,745
866,973 1,444,545 4,493,269
562,022 4,395,340 4,139,385
731,856 439,549

1,850,731 1,281,927
954,005 1,763,573 4,475,597
569,937 4,478,926 4,097,399
605,633 517,156

289,490 15,302
5,702,234 434,233

21,773
5,820,943 846,147

20,199 15,302 84,020 434,233

18,056
390,516 846,147

Total Expenses

$ 113,087,043 $ 113,620,757 $ 45,063,137 $ 43,189,731

The table above shows that while the total cost of services for providing services decreased by 0.5% from the prior year, the net cost to the local taxpayers increased 4.3% from the prior year. In other words, as compared to the proceeding fiscal year, a larger percentage of the cost of providing services in fiscal year 2009 fell to the taxpayers of Floyd County. Even with reductions in budgeted expenditures, this condition is occurring because increased costs for such items as salaries, benefits, maintenance, fuel etc. is occurring at a higher rate than is being funded from program revenues (State, Federal, and revenues for services and sales).
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS
Information about the School District's governmental funds is presented starting on Exhibit "C" and Exhibit "E" of this report. Governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues of $119.8 million and total expenditures of $123.3 million in fiscal year 2009. Total governmental fund balances of $45.3 million at June 30,
2009, increased almost $22. 7 million from the prior year. This increase in fund balance occurred
primarily because the School District sold $25.0 million in General Obligation Bonds for capital projects at a premium of $1.06 million. Expenditures for general funds and capital projects exceeded current year revenues dedicated to general fund and capital projects.

vii

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2009
General Fund Budget Highlights
The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the General Fund. During the course of fiscal year 2009, the School District amended its general fund budget as needed.
The School District budget is adopted at the aggregate level and maintained at the program, function, object, and site levels to facilitate budgetary control. The budgeting systems are designed to control the total budget, but provide flexibility to meet the ongoing programmatic needs. The budgeting systems are also designed to control total site budgets but provide flexibility for site management as well.
For the General Fund, the final actual revenues of $107.41 million were under the final budgeted amount of $112.08 million by $4.67 million. This difference (final actual vs. final budget) was primarily attributable to revenues for property taxes under final budget of $0.2 million, sales taxes over final budget of $0.4 million, revenues for State Funds under the final budget of $5.3 million (from mid-year austerity reductions), revenues for charges for services over final budget of $0. 7 million, and miscellaneous revenues under final budget of $0. 7 million The School District traditionally estimates revenue on a conservative basis to avoid shortfalls in actual revenues. The General Fund's final actual expenditures of $108.35 million were under the final budget amount of $112.85 million by $4.5 million. This difference (final actual vs. final budget) was primarily attributable to actual expenditures for instruction under the final budget of $4.9 million, expenditures for pupil services exceeding the final budget by $740,000, expenditures for school administration exceeding the final budget by $840,000, expenditures for maintenance and operation of plant under the final budget by $290,000, expenditures for other support services exceeding final budget of over $350,000, Food Services under the final budget by $340,000 and other community services exceeding the final budget by over $260,000 (for reimbursed after school care), and other functions totaling less than $50,000.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At fiscal year ended June 30, 2009, the School District had $115.5 million invested in capital assets, net of accumulated depreciation, all in governmental activities. These assets are made up of a broad range of items including buildings; land; land improvements; and food service, transportation and maintenance equipment. This year's major additions totaled almost $6 million and included:
Finalizing the construction of a new classroom building at the Floyd County College and Career Academy funded by the Charter School Grant.
Completion of the re-roofing of the Central Office warehouse complex. Other small renovation projects. Beginning the demolition and site work for a New Model High School.
Table 4 reflects a summary of these balances, net of accumulated depreciation, as compared to the prior fiscal year.
viii

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2009

Land Construction in Progress Land Improvements Buildings and Improvements Equipment
Total

Table 4 Capital Assets at June 30
(Net of Depreciation)

Governmental Activities

FY 2009

FY 2008

$

2,651,464 $

2,651,488

5,221,474

1,173,686

1,085,105

1,029,289

98,991,899

101,264,701

7,556,187

7,484,392

$ 115,506,129 $ 113,603,556

Additional information about the School District's Capital Assets can be found in the Notes to the Basic Financial Statements.

Long~Term Debt

At June 30, 2009, the School District had $49.4 million in total debt outstanding which consisted of $34.65 million in bond debt, $6.1 million in capital lease debt, $7.6 million in compensated absences debt, and $995,820 in unamortized bond premium. Table 5 summarizes the School District's debt as compared to the prior fiscal year. During the fiscal year ended June 30, 2009, the citizens of Floyd County passed an Educational Local Option Sales Tax (ELOST) for a period of five years for the purpose of construction and renovation, technology and transportation. Additionally, the School District sold $25.0 million in General Obligation Bonds to fund a portion of these capital projects with the debt to be paid back with the proceeds of this special purpose local option sales tax which continued as of April 1, 2009.

Table 5 Debt at June 30

Governmental Activities

FY 2009

FY 2008

Bonds Payable Unamortized Bond Premium Capita I Leases Compensated Absences

$

34,650,000

$

17,540,000

995,820

268,575

6,129,813

6,638,731

7,593,364

7,271,055

Total

$

49,368,997

$

31,718,361

Additional information about the School District's debt can be found in the Notes to the Basic Financial Statements.

ix

FLOYD COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2009
FACTORS BEARING ON THE DISTRICT'S FUTURE
Currently known circumstances that are expected to have a significant effect on financial position or results of operations in future years are as follows:
The School District is financially stable. The School District's current operating millage is 18.588 which produces approximately $1,707,610 per mill net of fees. The School District's enrollment remained stable this school year as compared to past 3 years with an average of 100 students per year over the last three years. The School District plans to construct a new replacement Model High School and other classroom additions in the next year to reduce portable classrooms at various schools. The School District plans to fund additional capital outlays with the one percent local sales tax revenue, general obligation bonds and state capital outlay grants.
The School District will continue to face challenges from the nationwide economic downturn resulting in the state funding decreases. From fiscal year 2003 through fiscal year 2009, the QBE formula adjustments (austerity cuts) have totaled just slightly over $14.0 million. For fiscal year 2010 alone, the Amended QBE Formula Adjustment is projected to be $10,474,000 with $4,877,747 to be replaced by state fiscal stabilization funds from the American Recovery and Reinvestment Act (ARRA) funded by the Federal government. To meet these funding reductions, the School District will reduce its expenditures thoughtfully to avoid reducing services that directly impact student achievement, and with the use of Stimulus funding, save or create jobs that will positively impact student achievement. The School District will also continue to be impacted by the remedial actions required for under performing schools under the No Child Left Behind Act. In the midst of these challenges, the School District remains confident in the ability to maximize resources to provide the best possible educational experience for all of our students.
CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Mr. Chris Toles, Executive Director of Financial Services, Floyd County School District, 600 Riverside Parkway, NE, Rome, GA. You may also email your questions to Mr. Toles at ctoles@floyd boe. net.
X

FLOYD COUNTY BOARD OF EDUCATION

FLOYD COUNTY BOARD OF EDUCATION STATMENT OF NET ASSETS JUNE 30, 2009
ASSETS Cash and Cash Equivalents Investments Accounts Receivable
Taxes State Government Federal Government Local Government Inventories Deferred Charges Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Depreciation)
Total Assets
LIABILITIES Accounts Payable Salaries and Benefits Payable Claims Incurred but Not Reported (IBNR) Retainages Payable Long-Term Debt
Due within one Year Due in more than one Year
Total Liabilities
NET ASSETS Invested in Capital Assets - Net of Related Debt Restricted for:
Continuation of Federal Programs Debt Services Capital Projects Unrestricted (Deficit)
Total Net Assets
Total Liabilities and Net Assets
The notes to the basic financial statements are an integral part of this statement. - 1-

EXHIBIT "A"
GOVERNMENTAL ACTIVITIES
$ 38,028,329.48 12,698,809.14
1,893,334.22 7,362,697.99
761,835.69 12,048.26
136,857.46 223,354.05 7,872,937.60 107,633,191.00

$

42,693.86

15,043,237.96

353,374.00

71,984.60

9,037,157.54 40,331,839.08

$ 64,880,287.04

$ 98,114,085.86 450,228.98
10,461,228.51 3,007,539.68 -289,975.18
$ 111,743,107.85
$ 176,623,394.89

FLOYD COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2009

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance And Operation Of Plant Student Transportation Service Support Services - Central Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Community Services Operations Interest On Short-Term And Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Other Taxes Railroad Equipment Sales Tax Special Purpose Local Option Sales Tax For Debt Services For Capital Projects Real Estate Transfer Tax Intangible Taxes Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous Gain or Loss of Sale and Disposals of Assets
Total General Revenues
Change in Net Assets
Net Assets Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$ 72,740,427.71 $

90,034.50

3,230,252.89 1,877,418.65 2,225,644.75 2,031,693.97 8,586,560.88
652,486.41 8,596,083.18 5,260,073.88
839,862.93 605,278.97

619,917.07 13,175.22

15,302.18 5,702,234.09
289,489.83 434,232.99

1,934,751.44 265,641.33

$

$

The notes to the basic financial statements are an integral part of this statement. 2-

EXHIBIT "B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$ 45,842,454.79 $ 2,403,327.90 $ -24,404,610.52

692,247.94 763,673.55 1,341,627.26 580,895.92 4,093,291.63
90,464.80 4,200,743.32
812,243.94 108,006.54 165,730.04

17,044.11 6,253.05
295,270.00

-1,918,087 .88 -1,113,745.10
-866,973.38 -1,444,545.00 -4,493,269.25
-562,021.61 -4,395,339.86 -4,139,384.72
-731,856.39 A39,548.93

3,554,816.63 3,649.63

128,645.89

-15,302.18 -84,020.13 -20,198.87 A34,232.99

$ 62,249,845.99 $ 2,850,540.95 $ -45,063,136.81

$ 31,678,699.67 36,359.21

8,264,019.60 1,611,090.35
65,654.89 385,907.38 7,148,941.00 373,646.97 2,582,690.38
82,228.44

$ 52,229,237.89

$

7,166,101.08

104,577,006.77

$ 111,743,107.85

-3-

FLOYD COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2009

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Local Inventories

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 13,616,821.86 $ 24.411,507.62

$

271,753.03

1,965,827.60 $ 10,461,228.51

594,572.55 7,135,167.60
761,835.69 12,048.26
136,857.46

1,298,761.67 227,530.39

38,028,329.48 12,698,809.14
1,893,334.22 7,362,697.99
761,835.69 12,048.26
136,857.46

Total Assets

$ 22,529,056.45 $ 27,903,627.28 $ 10.461,228.51 $

60,893,912.24

=======

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Debt Service Capital Projects
unreserved Designated for Capital Outlay Designated for Student Activities Designated for Self-Insurance Designated for Severance Pay Undesignated Reported in: General Fund Capital Projects
Total Fund Balances

$

8,279.63 $

34,414.23

$

15,043,237.96

71,984.60

128,228.94

269,640.84

$ 15,179,746.53 $ 376,039.67

$

$

450,228.98

$

$ 10,461,228.51

$ 27,391,129.72

800,000.00 1,519,224.51
127,013.15 750,000.00

3,702,843.28

136,457.89

$ 7,349,309.92 $ 27,527,587.61 $ 10,461,228.51 $

42,693.86 15,043,237.96
71,984.60 397,869.78
15,555,786.20
450,228.98 10,461,228.51 27,391,129.72
800,000.00 1,519,224.51
127,013.15 750,000.00
3,702,843.28 136,457.89
45,338,126.04

Total Liabilities and Fund Balances $ 22,529,056.45 $ 27,903,627.28

The notes to the basic financial statements are an integral part of this statement. -4-

FLOYD COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2009

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Land Improvements Buildings Construction in Progress Machinery and Equipment Accumulated Depreciation
Total Capital Assets
Bond Issuance Costs are recognized when incurred in the Governmental Fund Statements, but are amortized over the life of the Bond Issue in the District-wide Statements.
Some of the School District's tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.
Property Taxes Sales Taxes
Total Tax Revenues
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
General Obligation Bonds Payable Unamortized Bond Premiums Capital Leases Payable Compensated Absences Payable Claims and Judgments
Total Long-Term Liabilities

$ 45,338,126.04

$

2,651,464.00

3,951,744.00

125,145,199.00

5,221,473.60

16,733,965.00

-38,197,717.00

115,506,128.60

223,354.05

$

128,228.94

269,640.84

397,869.78

$ -34,650,000.00 -995,819.4 7
-6,129,813.31 -7 ,593,363.84
-353,374.00

-49,722,370.62

Net Assets of Governmental Activities (Exhibit "A")

$ 111,743,107.85

The notes to the basic financial statements are an integral part of this statement. -5-

FLOYD COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2009

EXHIBIT "E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Capital Outlay Debt Services
Principal Dues and Fees Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Proceeds of Long-Term Capital Related Debt Premiums on Bonds Sold Sale of Equipment Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 31,607,854.62

$ 31,607,854.62

451,562.27 $ 1,341,449.51 $ 8,264,019.60

10,057,031.38

60,473,018.90

2,555,270.95

63,028,289.85

9,221,038.09

9,221,038.09

2,923,519.56

2,923,519.56

154,082.12

58,374.11

161,190.74

373,646.97

2,577,690.38

5,000.00

2,582,690.38

$ 107,408,765.94 $ 3,960,094.57 $ 8,425,210.34 $ 119,794,070.85

$ 69,959,060.63 $

130,924.07

$ 70,089,984.70

3,239,223.97 1,901,408.89 2,199,861.58 2,007,421.50 8,592,727.02
626,804.97 8,291,043.74 4,345,069.69
785,777.17 582,700.99
15,302.18 289,489.83 5,516,713.96

12,175.00
638,126.90 288,694.97
49,295.00
4,383,084.52

3,239,223.97 1,901,408.89 2,199,861.58 2,019,596.50 8,592,727.02
626,804.97 8,929,170.64 4,633,764.66
835,072.17 582,700.99
15,302.18 289,489.83 5,516,713.96 4,383,084.52

508,917.69 $ 248,171.17 333,198.87

7,890,000.00 437,623.50

8,398,917.69 248,171.17 770,822.37

$ 108,352,606.12 $ 6,592,588.19 $ 8,327,623.50 $ 123,272,817.81

$

-943,840.18 $ -2,632,493.62 $

97,586.84 $ -3,478,746.96

$ 25,000,000.00

1,063,833.85

$

82,252.44

930,000.00

-930,000.00

$ 25,000,000.00 1,063,833.85 82,252.44 930,000.00 -930,000.00

$

-847,747.56 $ 26,993,833.85

$ 26,146,086.29

$ -1,791,587.74 $ 24,361,340.23 $

97,586.84 $ 22,667,339.33

9,140,897.66

3,166,247.38 10,363,641.67

22,670,786.71

Fund Balances - Ending The notes to the basic financial statements are an integral part of this statement.
-6-

$ 45,338,126.04

FLOYD COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2009

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:

$ 22,667,339.33

Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:

Capital Outlay Depreciation Expense
Total Capital Assets

$ 5,960,247.60 -4,057,651.00

Tax revenues are not deferred in the Statement of Activities based on availability as they are in the Governmental Funds.

Property Taxes Sales Taxes

$

107,204.26

269,640.84

In the Statement of Activities, only the gain or loss on the sale or disposal of the capital assets equipment is reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the capital assets sold or disposed of.

Proceeds received from General Obligation Bonds Sold are reported as liabilities in the Statement of Activities, whereas in the Governmental Funds these proceeds are reported as Other Financing Sources.

Proceeds of General Obligation Bonds Premiums on Bonds Sold

$ -25,000,000.00 -1,063,833.85

Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:

Payment of Capital Lease Debt Redemption of Bond Principal
Total Debt Repayment

$

508,917.69

7,890,000.00

Some items in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the Governmental Funds. These activities consist of:

Increase in Workers Compensation Claims (Incurred but not reported) Unamortized Bond Issuance Costs Amortization of Bond Premiums Increase in Compensated Absences

$

-353,37 4.00

223,354.05

336,589.38

-322,309.22

1,902,596.60 376,845.10 -24.00
-26,063,833.85 8,398,917.69
-115,739.79

Change in Net Assets of Governmental Activities(Exhibit B)

$ 7,166,101.08

The notes to the basic financial statements are an integral part of this statement. -7-

(This page left intentionally blank)

FLOYD COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2009
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS $ 205,223.53
$ 205,223.53

The notes to the basic financial statements are an integral part of this statement. -9-

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT H 11 11

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Floyd County Board of Education was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
BLENDED COMPONENT UNIT - FLOYD COUNTY SCHOOLS COLLEGE AND CAREER ACADEMY, INC.
The Floyd County Schools College and Career Academy, Inc. (Charter School) is responsible to provide a seamless blend of academics with career and technical education and skills to better serve the Floyd County community. The Charter School was created through a contract between the School District and the Charter School whereby all State funding associated with the students attending the Charter School and certain specified local funds are turned over to the Charter School to cover the cost of its operations. The financial statements of the Charter School have been reported in the general fund.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Floyd County Board of Education.
District-wide Statements:
The Statement of Net Assets and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.

- 10 -

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "H"

Fund Financial Statements:
The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds, and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments, or individuals.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on long-term debt and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
- 11 -

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "H"

The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
CASH AND CASH EQUIVALENTS
Composition of Deposits
Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
Composition of Investments Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
1. Obligations issued by the State of Georgia or by other states,
2. Obligations issued by the United States government,
3. Obligations fully insured or guaranteed by the United States government or a United States government agency,
4. Obligations of any corporation of the United States government,
5. Prime banker's acceptances,
6. The Georgia Fund 1 administered by the State of Georgia, Office of Treasury and Fiscal Services,
7. Repurchase agreements, and
8. Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.
RECEIVABLES
Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
- 12 -

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "H"

PROPERTY TAXES
The Floyd County Board of Commissioners fixed the property tax levy for the 2008 tax digest year (calendar year) on July 29, 2008 (levy date). Taxes were due on November 17, 2008 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2008 tax digest are reported as revenue in the governmental funds for fiscal year 2009. The Floyd County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2009, for maintenance and operations amounted to $31,571,495.41.
The tax millage rate levied for the 2008 tax year (calendar year) for the Floyd County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

18.588 mills

SALES TAXES
Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $9,605,469.11 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.
INVENTORIES
Food Inventories
On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.
CAPITAL ASSETS
Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.
Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:

- 13 -

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "H"

Land Land Improvements Buildings and Improvements Equipment

Capitalization

Policy

All

$

5,000.00

$

5,000.00

$

5,000.00

Estimated Useful Life
N/A 20 to 80 years 10 to 80 years 3 to 20 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

COMPENSATED ABSENCES
Members of the Teachers Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual school districts.

Employees of the Floyd County Board of Education shall receive severance pay based upon: (1) years of service and (2) amount of accumulated sick leave at the time of retirement or voluntary termination of employment. The amount of severance pay due shall be calculated according to a set of formulas, definitions, and regulations approved by the Board. Severance pay will be paid only once in an employee's tenure with the school system. All payments are based on the total number of years of service as a full-time employee for a full day. Partial days will be computed only as a portion of a day (i.e..5 must be paired with another .5 to equal a full day). The amount will be paid from local funds. Activity for the preceding three years is as follows:

Beginning of Year Liability

Increase

Decrease

End of Year Liabililty

2007 2008 2009

$

61281,873.00 $

2,8831959.07 $

2,375,731.11 $ 6,790,100.96

$

61790,100.96 $

21832,936.29 $

2,3511982.63 $ 7,271,054.62

$

7,271,054.62 $

2197 4,284.68 $

2,6511975.46 $ 7,593,363.84

GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method for the 2009 General Obligation bonds.
In the District-wide and fund financial statements, the School District recognizes prior year's bond issuance costs during the fiscal year bonds are issued. In the fund financial statements, premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. To conform to generally accepted accounting principles, issuance costs should be deferred and amortized over the life of the bonds using the straight-line method. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.

- 14 -

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT H 11 11

NET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets These represent resources for which the School District is legally or contractually obligated to spend resources for continuation of Federal Programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
NOTE 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (0.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
1. Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
2. Insurance on accounts provided by the Federal Deposit Insurance Corporation,
3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or
municipalities of the State of Georgia,
5. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
7. Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
- 15 -

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "H"

CATEGORIZATION OF DEPOSITS
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2009, the bank balances were $42,627,171.18. The amounts exposed to custodial credit risk are classified into three categories as follows:

Category 1 Uncollateralized,

Category 2 Cash collateralized with securities held by the pledging financial institution,

or

Category 3 - Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name.

The School District's deposits by custodial credit risk category at June 30, 2009, are as follows:

Custodial Credit

Risk Category

Bank Balance

1

$

0.00

2

24,346,074.57

3

0.00

Total

$ 24 346 074.57

CATEGORIZATION OF INVESTMENTS

The School District's investments as of June 30, 2009, are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Type

Fair Value

Investment Maturity Less Than 1 Year

Debt Securities U.S. Treasuries Repurchase Agreements

$ 1,947,501.94 10,479,554.17

$ 1,947,501.94 10,479,554.17

$ 12,427,056.11

$ 12,427,056.11

Investment Pools Office of Treasury and Fiscal Services Georgia Fund 1

2,166.33

Total Investments

$ 12,429,222.44

- 16 -

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "H"

The Georgia Fund 1, formerly referred to as LGIP, administered by the State of Georgia, Office of Treasury and Fiscal Services is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of Treasury and Fiscal Services for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at
http://www.audits.state.ga.us/internet/searchRpts.html.
The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2009, was 41 days.

Interest Rate Risk
Interest rate risk is the risk that changes in interest rates of debt investment will adversely affect the fair value of an investment. The School District does not have a formal policy for managing interest rate risk.

Custodial Credit Risk
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk.

At June 30, 2009, $11,261,831.41 of the School District's applicable investments were (1) uninsured and unregistered, with securities held by the counterparty's trust department or agent in the name of the School District and (2) uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent, but not in the School District's name.

Credit Quality Risk
Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The School District does not have a formal policy for managing credit quality risk.

The investments subject to credit quality risk are reflected below:

Rated Debt Investments

Fair Value

Quality Ratings AAA

Debt Securities Repurchase Agreements

$ 10,479,554.17

$ 10,479,554.17

Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The School District does not have a formal policy for managing concentration of credit risk. More than 5% of the School District's investments are in Implicitly Guaranteed U. S. Agency Repurchase Agreement and U. S. Treasuries. These investments are 84% and 16% respectively, of the School District's total investments.

- 17 -

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "H"

NOTE 4: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

NOTE 5: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year:

Governmental Activities

Capital Assets, Not Being Depreciated:

Land and Land Improvements

$

Construction Work In Progress

Total Capital Assets,

Not Being Depreciated

$

Balance July 1, 2008

Additions

Reductions

Balance June 30, 2009

2,651,488.00

$

24.00 $

1,173,686.00 $ 4,489,842.60 442,055.00

2,651,464.00 5,221,473.60

3,825,174.00 $ 4,489,842.60 $ 442,079.00 $ 7,872,937.60

Capital Assets, Being Depreciated: Building and Improvements Equipment Land Improvements

$ 124,735,873.00 $ 441,564.00 $ 32,238.00 $ 125,145,199.00

16,403,728.00 1,322,906.00 992,669.00

16,733,965.00

3,803,754.00

147,990.00

3,951,744.00

Less: Accumulated Depreciation: Building and Improvements Equipment Land Improvements

23,471,172.00 8,919,336.00 2,774,465.00

2,714,366.00 1,251,111.00
92,174.00

32,238.00 992,669.00

26,153,300.00 9,177,778.00 2,866,639.00

Total Capital Assets, Being Depreciated, Net

$ 109,778,382.00 $ -2,145,191.00 $

0.00 $ 107,633,191.00

Governmental Activity Capital Assets, Net $ 113,603,556.00 $ 2,344,651.60 $ 442,079.00 $ 115,506,128.60

Capital assets being acquired under capital leases as of June 30, 2009, are as follows:

Buildings and Improvements Less: Accumulated Depreciation

Governmental Funds
$ 3,048,396.00 1,109,996.00
$ 1,938,400.00

- 18 -

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "H"

Current year depreciation expense by function is as follows:

Instruction Support Services
Educational Media Services General Administration Student Transportation Services Food Services

$

$

27,091.00

9,939.00

708,603.00

$

3,107,540.00
745,633.00 204,478.00 4,057,651.00

NOTE 6: RESTRICTED ASSETS
Special Purpose Local Option Sales Tax (SPLOST) proceeds and General obligation Bond proceeds are restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2009, were as follows:

Restricted Cash and Cash Equivalents: Capital Acquisitions
Restricted Investments: Debt Services Capital Acquisitions

District-wide Capital Projects

SPLOST

Bond Proceeds

Debt Service Funds

$

41,431.91 $ 24,461,148.21

$

1,965,827.60

$ 10,461,228.51

NOTE 7: INTERFUND TRANSFERS

lnterfund transfers for the year ended June 30, 2009, consisted of the following:

Transfer to

Transfers From General Fund

District-wide Capital Projects

$

930,000.00

Transfers are used to move other local revenues collected by the General Fund to the District-wide Capital Projects Fund to fund local capital projects.
NOTE 8: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.
The School District has obtained commercial insurance for risk of loss associated with torts, assets, errors or omissions, and acts of God. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.

- 19 -

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "H"

The School District has established a limited risk management program for workers compensation claims. In connection with this program, a self-insurance reserve has been established within the General Fund by the School District. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. An excess coverage insurance policy covers individual claims in excess of $250,000.00 loss per occurrence, up to the statutory limit.

Changes in the workers compensation claims liability during the last two fiscal years are as follows:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2008 $ 2009 $

583,585.05 $ 401,964.89 $

602,070.63 $ 493,230.05 $

783,690.79 $ 541,820.94 $

401,964.89 353,374.00

The School District is self-insured with regard to unemployment compensation claims. In connection with this program, a self-insurance reserve has been established within the General Fund by the School District. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.
Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:

2008 $ 2009 $

Beginning of Year Liability
0.00 $ 0.00 $

Claims and Changes in Estimates
7,684.00 $ 17,531.00 $

Claims Paid
7,684.00 $ 17,531.00 $

End of Year Liability
0.00 0.00

The School District has purchased surety bonds to provide additional insurance coverage as follows:

Position Covered
Superintendent Blanket Employee

Amount
$ 100,000.00 $ 100,000.00

NOTE 9: POLLUTION REMEDIATION OBLIGATIONS
The School District is the owner of Model High School located at Rome, Georgia, and is responsible for asbestos removal.
The School District has recorded an increase to construction in progress related to this pollution remediation in the amount of $172,679.60, on the Statement of Net Assets. The actual cost is based on the amount of payments made on a contract signed in the amount of $850,000.00 for the removal of the asbestos contamination detected and is to be considered a cost of the new high school to be built. The remaining amount to be paid on the contract of $677,320.40 is included in Note 12: Significant Commitments. Pollution remediation liability activity in fiscal year 2009 was as follows:

- 20 -

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT H 11 11

Beginning Balance July 1, 2008

Additions

Reductions

Ending Balance June 30, 2009

Current Portion

Polution Remediation $

0.00 $ 172,679.60 $ 172,679.60 $

=""""""===

NOTE 10: LONG-TERM DEBT

0.00 $

0.00

""""""""""""""""""""""""""""""=

CAPITAL LEASES

The Floyd County Board of Education entered into a lease agreement for construction and energy management systems. This lease agreement qualifies as a capital lease for accounting purposes, and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of its inception.

COMPENSATED ABSENCES
Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences.

GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows:

Purpose
General Government - Series 2003 General Government - Series QZAB 2004 General Government- Series 2004 Genera I Government - Series 2009

Interest Rates
2.49% $ 0.00% 2.00% - 4.50% 3.00% - 4.00%
$

Amount
1,000,000.00 2,000,000.00 6,650,000.00 25,000,000.00
34,650,000.00

The changes in Long-Term Debt during the fiscal year ended June 30, 2009, were as follows:

Balance July 1, 2008

Additions

Deductions

Balance June 30, 2009

Due Within One Year

G.0. Bonds

$

Capital Leases

Compensated Absences

Bond Premiums Amortized

17,540,000.00 $ 6,638,731.00 7,271,054.62 268,575.00

25,000,000.00 $
2,974,284.68 1,063,833.85

7,890,000.00 $ 508,917.69
2,651,975.46 336,589.38

34,650,000.00 $ 7,650,000.00

6,129,813.31

536,021.77

7,593,363.84

600,000.00

995,819.47

251,135.77

$

$

$

$

At June 30, 2009, payments due by fiscal year which includes principal and interest for these items are as follows:

- 21 -

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "H"

Year Ending June 30:
2010 2011 2012 2013 2014 2015-2019
Total Principal and Interest
Year Ending June 30:
2010 2011 2012 2013 2014 2015-2018
Total Principal and Interest

Capital Leases

Principal

Interest

$

536,021.77 $

564,568.90

594,636.38

626,305.18

659,660.57

3,148,620.51

306,094.79 277,547.66 247,480.18 215,811.38 182,455.99 360,199.07

$

6,129,813.31 $

1,589,589.07

General Obligation Debt

Principal

Interest

Unamortized Bond
Premium

$

7,650,000.00 $

3,000,000.00

4,000,000.00

5,000,000.00

6,000,000.00

9,000,000.00

$ 34,650,000.00 $

716,416.53 $ 759,350.00 654,350.00 506,850.00 322,325.00 112,650.00
3,071,941.53 $

251,135.77 212,766.77 212,766.77 212,766.77 106,383.39
995,819.47

NOTE 11: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $905,081.80 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $829,466.29
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $31,633.51
Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $43,982.00
- 22 -

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "H"

NOTE 12: SIGNIFICANT COMMITMENTS
The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2009:

Project

Unearned Executed Contracts

Model High School

$22,116,839.78

The amount described in this note is not reflected in the basic financial statements.
NOTE 13: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the granter agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
NOTE 14: POSTEMPLOYMENT BENEFITS
GEORGIA RETIREE HEALTH BENEFIT FUND
Plan Description. The School District contributes to the Georgia Retiree Health Benefit Fund (GRHBF), a cost-sharing multiple-employer defined benefit postemployment healthcare plan administered by the Department of Community Health. The GRHBF is a cost-sharing multipleemployer defined benefit postemployment healthcare plan that covers retired employees of the State including all departments, agencies and local school systems. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries through the health insurance plan for State employees. Pursuant to Title 45, Chapter 18 of the Official Code of Georgia Annotated, the authority to establish and amend the benefit provisions of the employees' health insurance plan (including benefits to retirees) is assigned to the Board of Community Health (Board). The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department of Community Health at 2 Peachtree Street, Atlanta, Georgia 30303.
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) of the cost of health insurance coverage.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rate is established to fund both the active and retired employee health insurance plans based on projected "pay-as-you-go" financing requirements. The combined rates for the active and retiree plans for the fiscal year ended June 30, 2009, were as follows:

- 23 -

FLOYD COUN1Y BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT H 11 11

Certified employees
July 2008 - July 2009 February 2009 March 2009 - May 2009 June 2009

18.534% of state-based salaries for August - February coverage 8.579% of state-based salaries for March coverage 3.688% of state-based salaries for April - June coverage 0.000% of state-based salaries for July coverage

Non-Certificated Employees

$162.72 per month

No additional contribution was required by the Board for fiscal year 2009 nor contributed to GRHBF to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other postemployment benefits and are subject to appropriation.

The School District's contributions to the health insurance plans for the years ended June 30, 2008, and June 30, 2009, were $7,110,999.26, and $9,570,121.25, respectively, which equaled the required contribution.

NOTE 15: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.

- 24 -

FLOYD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "H"

Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2009, were 5% of annual salary. The member contribution rate will increase to 5.25% effective July 1, 2009, and to 5.53% effective July 1, 2010. Employer contributions required for fiscal year 2009 were 9.28% of annual salary as required by the June 30, 2006, actuarial valuation. The employer contribution rate will increase to 9.74% effective July 1, 2009, and to 10.28% effective July 1, 2010.
Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year
2009 2008 2007

Percentage Contributed
100% 100% 100%

Required Contribution

$

6,002,396.51

$

5,699,815.91

$

5,266,884.59

- 25 -

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FLOYD COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2009

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Service Central Support Services Other Support Services Food Services Operation Enterprise Operations Community Services Operations
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Other Financing Sources Other Financing Uses
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

ACTUAL AMOUNTS

$ 31,909,417.00 $ 31,814,417.00 $

95,000.00

65,759,548.14

65,759,548.14

7,956,330.00

8,363,205.84

2,182,600.00

2,182,600.00

618,000.00

618,000.00

3,250,000.00

3,250,000.00

31,607,854.62 451,562.27
60,473,018.90 9,221,038.09 2,923,519.56 154,082.12 2,577,690.38

$ 111,675,895.14 $ 112,082,770.98 $ 107,408,765.94

$ 74,702,697.36 $ 74,911,358.80 $

2,456,521.52 2,206,729.82 2,236,740.00 2,054,035.11 7,737,788.43
736,740.00 8,591,033.90 4,873,423.00
717,067.00 219,696.00 5,862,200.00

2,500,021.52 2,279,602.24 2,236,279.95 2,078,157.11 7,750,049.75
716,740.00 8,579,760.85 4,887,423.00
803,136.00 231,200.93 5,859,017.83

25,034.00

25,034.00

$ 112,419,706.14 $ 112,857,781.98 $

$

-743,811.00 $

-775,011.00 $

69,959,060.63
3,239,223.97 1,901,408.89 2,199,861.58 2,007,421.50 8,592,727.02
626,804.97 8,291,043.74 4,345,069.69
785,777.17 582,700.99 5,516,713.96
15,302.18 289,489.83
108,352,606.12
-943,840.18

$

15,000.00 $

15,000.00 $

-1,330,000.00

-1,330,000.00

$ -1,315,000.00 $ -1,315,000.00 $

$ -2,058,811.00 $ -2,090,011.00 $

9,088,928.89

9,088,928.89

253,524.54

256,237.05

82,252.44 -930,000.00 -847,747.56 -1,791,587.74 9,140,897.66

Fund Balances Ending

$

7,283,642.43 $

7,255,154.94 $

7,349,309.92

=======

Notes to the Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting, which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

-27-

FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2009

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Office of Treasury and Fiscal Services National Forest Reserve Funds
Total U.S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
State Fiscal Stabilization Fund Cluster Pass-Through From Georgia Department of Education ARRA Education State Grants
Title I, Part A Cluster Pass-Through From Georgia Department of Education Title I Grants to Local Educational Agencies
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Education for Homeless Children and Youth English Language Acquisition Grants Improving Teacher Quality State Grants Twenty-First Century Community Learning Centers Pass-Through From Florida State University Comprehensive School Reform Demonstration
Total U. S. Department of Education

CFDA
NUMBER

PASS
THROUGH ENTITY ID NUMBER

EXPENDITURES
IN PERIOD

10.553 10.555

N/A

(2)

N/A

$

5,163,076.87 (1)

$ 5,163,076.87

10.665

N/A

(3)

$ 5,163,076.87

84.027 84.173

N/A

$ 2,013,292.33

N/A

88,872.65

$ 2,102,164.98

* 84.394

N/A

1,254,771.00

* 84.010

N/A

1,922,225.15

84.048 84.196 84.365
* 84.367
84.287
84.332

N/A

118,644.00

N/A

36,579.89

N/A

61,951.09

N/A

399,416.82

N/A

11,087.76

N/A

24,582.08

$ 5,931,422.77

Total Federal Financial Assistance N/A = Not Available

$ 11,094,499.64

FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2009
Notes to the Schedule of Expenditures of Federal Awards
(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $262,546.28.
(2) Expenditures for the funds earned on the School Breakfast Program ($767,468.85) were not maintained separately and are included in the 2009 National School Lunch Program.
(3) Funds earned on this program in the amount of $5,376.50, do not require reporting of expenditures.
Major Programs are identified by an asterisk(*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Floyd County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

SCHEDULE "2"

See notes to the basic financial statements.

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FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2009

SCHEDULE "3"

AGENCY/FUNDING
GRANTS
Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades- Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student- Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Vocational Supervisors Mid-term Adjustment Hold-Harmless Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Charter Schools Health Insurance High School Graduation Coach Middle School Graduation Coach National Teacher Certification Preschool Handicapped Program Teachers' Retirement Virtual Schools Grant

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$ 1,785,283.45

$ 1,785,283.45

3,395,456.00 310,843.00
7,761,274.00 718,811.00
3,733,459.00 371,337.00
5,519,931.00 5,040,852.00 1,860,445.00 10,065,101.00 3,241,592.00
389,986.00 458,464.00 356,341.00 1,128,423.00 327,007.00 222,468.00
1,547,300.00 2,539,114.00 2,603,961.00
1,358,851.00 295,270.00 180,325.00 33,898.00 45,629.00
7,148,941.00 247,112.00 239,773.00
-4,276,138.00
5,000.00 829,466.29 165,650.00 165,650.00
97,159.65 430,427.00
31,633.51 1,625.00

3,395,456.00 310,843.00
7,761,274.00 718,811.00
3,733,459.00 371,337.00
5,519,931.00 5,040,852.00 1,860,445.00 10,065,101.00 3,241,592.00
389,986.00 458,464.00 356,341.00 1,128,423.00 327,007.00 222,468.00
1,547,300.00 2,539,114.00 2,603,961.00
1,358,851.00 295,270.00 180,325.00 33,898.00 45,629.00
7,148,941.00 247,112.00 239,773.00
-4,276,138.00
5,000.00 829,466.29 165,650.00 165,650.00
97,159.65 430,427.00
31,633.51 1,625.00

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FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2009

SCHEDULE "3"

AGENCY/FUNDING
GRANTS
Georgia State Financing and Investment Commission Reimbursement on Construction Projects
Natural Resources, Georgia Department of Arrowhead Grant
Office of Treasury and Fiscal Services Public School Employees Retirement

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$ 2,555,270.95 $ 2,555,270.95

$

51,316.00

51,316.00

43,982.00

43,982.00

See notes to the basic financial statements.

-31-

FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2009

SCHEDULE "4"

ffi.QJ.EI

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED IN PRIOR YEARS (3)

PROJECT STATUS

Construct, replace, add to, renovate, repair, modify,

improve and equip existing school buildings and other

buildings and facilities useful or desirable in

connection therewith, including Alto Park Elementary,

Armuchee Elementary, Armuchee Middle School,

Armuchee High, Cave Spring Elementary, Coosa

Middle, Coosa High, Floyd County Education Center,

Floyd County Technical High School, Garden Lakes

Elementary, Glenwood Elementary, Johnson

Elementary, McHenry Elementary, Midway Elementary,

Model Elementary, Model Middle, Model High,

Pepperell High, Pepperell Middle, Pepperell Primary,

Pepperell Elementary, and the central office, acquire

system-wide technology improvements, acquire school

buses, acquire the necessary property therefor, both

real and personal, and to pay or reimburse the

expenses of the Floyd County School District necessary

to accomplish the foregoing, and providing funds for

the retirement of previously incurred general obligation

indebtedness evidenced by the Floyd County School

District General Obligation School Bonds, Series

1999.

$

48,750,000.00 $

55,957,479.38 $ 1,860,086.38 $ 54,097,393.00

Completed

Construct, replace, add to, renovate, repair, modify, improve and equip existing school buildings and other buildings and facilities useful or desirable in connection therewith, including Alto Park Elementary, Armuchee Elementary, Armuchee Middle School, Armuchee High, Cave Spring Elementary, Coosa Middle, Coosa High, Floyd County Education Center, Floyd County Technical High School, Garden Lakes Elementary, Glenwood Elementary, Johnson Elementary, McHenry Elementary, Midway Elementary, Model Elementary, Model Middle, Model High, Pepperell High, Pepperell Middle, Pepperell Primary, Pepperell Elementary, and the central office, acquire system-wide technology improvements, acquire school buses, acquire the necessary property therefor, both real and personal, and to pay or reimburse the expenses of the Floyd County School District necessary to accomplish the foregoing.

45,000,000.00

45,000,000.00

1,760,728.41

Ongoing

$ 93,750,000.00 $ 100,957,479.38 $ 3,620,814.79 $ 54,097,393.00

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.
(3) The voters of Floyd County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

See notes to the basic financial statements.

-32-

FLOYD COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2009

SCHEDULE "5"

DESCRIPTION

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Primary Grades (1-3) Program

Primary Grades-Early Intervention (13) Program

Upper Elementary Grades (4-5) Program

Upper Elem Grades-Early Intervention (4-5)

Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category I

Category 111

Category IV

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

3,930,579.00 $ 397,086.00
9,030,800.00 888,042.00
4,336,953.00

3,742,967.39 $ 126,142.52
11,350,055.81 779,410.88
5,060,941.92

416,911.00 6,463,485.00 5,915,647.00 2,184,513.00 11,647,703.00
3,786,458.00 468,415.00 538,182.00 414,005.00

431,982.77 9,152,330.33 9,982,330.64 1,572,343.75
147,801.86 9,693,786.86
439,446.48 1,709,741.24
476,951.22 263,449.87

54,578.68 $ 303,507.43 114,095.81

3,797,546.07 126,142.52
11,653,563.24 779,410.88
5,175,037.73

337,019.82 417,448.93 262,683.35

431,982.77 9,489,350.15 10,399,779.57 1,835,027.10

119,548.70 169,131.16
38,080.09

147,801.86 9,813,335.56
608,577.64 1,747,821.33

476,951.22 263,449.87

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$ 50,418,779.00 $ 54,929,683.54 $ 1,816,093.97 $ 56,745,777.51

Media Center Program Staff and Professional Development

1,317,204.00 260,018.00

1,941,536.02 27,188.31

136,429.43 113,137.18

2,077,965.45 140,325.49

TOTAL QBE FORMULA FUNDS

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment.

See notes to the basic financial statements.

-33-

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 18, 2010

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Floyd County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Floyd County Board of Education as of and for the year ended June 30, 2009, which collectively comprise Floyd County Board of Education's basic financial statements and have issued our report thereon dated June 18, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Floyd County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Floyd County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Floyd County Board of Education's internal control over financial reporting.
A control deficiencyexists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Floyd County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Floyd County Board of Education's financial statements that is more than inconsequential will not be prevented or detected by the Floyd County Board of Education's internal control.

2009YB-10

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Floyd County Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Floyd County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted a certain matter that we have reported to management of Floyd County Board of Education in a separate letter dated June 18, 2010.
This report is intended solely for the information and use of management, members of the Floyd County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Resp?~ed,uJ, 4)~

RWH:as 2009YB-10

Russell W. Hinton, CPA, CGFM State Auditor

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 18, 2010

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Floyd County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Floyd County Board of Education with the types of compliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2009. Floyd County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Floyd County Board of Education's management. Our responsibility is to express an opinion on Floyd County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Floyd County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Floyd County Board of Education's compliance with those requirements.

2009SA-10

In our opinion, the Floyd County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2009.

Internal Control Over Compliance

The management of Floyd County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Floyd County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Floyd County Board of Education's internal control over compliance.

A control deficiency in an entity's internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control.

Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.

This report is intended solely for the information and use of management, members of the Floyd County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

Respectfully submitted,



?~ tu. c:ld...::b:

Russell W. Hinton, CPA, CGFM State Auditor

RWH:as 2009SA-10

SECTION Ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

FLOYD COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2009
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2009
SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the Floyd County Board of Education's financial statements was unqualified.
2. Significant Deficiencies in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Floyd County Board of Education did not disclose any significant deficiencies related to the financial statements.
3. Noncompliance Material to the Financial Statements The audit of the Floyd County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.
4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Floyd County Board of Education did not disclose any significant deficiencies in internal control over major programs.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Floyd County Board of Education's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The Floyd County Board of Education's audit did not disclose audit findings required to be reported by section .510(a) of 0MB Circular A-133.
7. Major Programs Federal awards audited as major programs are as follows: 84.010 Title I Grants to Local Educational Agencies 84.367 Improving Teacher Quality State Grants 84.394 ARRA - Education State Grants
8. Type A11 11 Program Dollar Threshold The dollar threshold for type "A" programs was $332,996.28.
9. Low Risk Auditee The Floyd County Board of Education qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133.
- 1-

FLOYD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2009 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. Ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
-2 -